January 15, 2015 / best practices, Cost Management, human capital, industry news, LIT, resource allocation, strategic planning, value-added services
Industry reports continue to paint a positive picture for the future of U.S. manufacturing industry. As we reported in a previous blog, one trend that continues to gain traction is “reshoring” or “near-shoring”—the process of moving a business operation from overseas back to the local country. While China has been a common landing spot for outsourced manufacturing, rising labor and energy costs are quickly taking away the region’s cost advantage and many companies are bringing manufacturing back to their local countries.
According to an article from Forbes, the greatest reshoring will likely occur in industries that benefit most from cheap natural gas and have access to global markets, as well as industries with products that change rapidly but whose product value/weight ratios do not justify air freight. This includes the apparel and technology industries, chemicals, and metal manufacturing and fabrication.
That’s great news for the U.S. metals industry, but how can companies make the most of this opportunity? In an editorial for IndustryWeek, Jim Moffatt, CEO of Deloitte Consulting LLP, says the key will be for companies “to think beyond costs and consider the ways that manufacturing in the U.S. can unlock value, unleash innovation, and create opportunities for growth.”
As a key player in the U.S. metals supply chain, you too can create opportunities for growth. Below are a few questions to consider:
- Are there previous customers that could now benefit from the convenience and cost benefits of your U.S. manufacturing base? This article from thefabricator.com gives a great example of how one supplier of fabricated metal assemblies was able to win back old business.
- Could a little investment attract some new customers or industries that are starting to reshore? Appliance makers, automotive, and aerospace are just a few of the industries starting to reinvest in U.S. manufacturing. Check out A.T. Kearney’s 2014 Reshoring Index for a list of the top reshoring industries.
- How can you better serve existing customers? Are there value-added processes you can add to your operation to stay competitive? According to this white paper from the LENOX Institute of Technology, more and more service centers are relying on adding services like sawing, laser cutting, and parts fabrication for a more predictable stream of revenue and to gain an edge over the competition.
- Does your company have access to talent that could accommodate possible growth? A recent editorial published by Forward says that reshoring is heightening the need for recruitment. Are you prepared?
Of course, there is no guarantee that reshoring will take off as much as everyone expects. In fact, there are several reports, including these from Manufacturing.net and The Guardian, that say reshoring trends are overstated. There are also some very real challenges that American metals companies are up against when competing with the global market, most notably high U.S. steel prices.
No one really knows the future, but right now, growth is happening—whether it is simply part of a cyclical recovery or the start of a manufacturing boom. Either way, it boils down to this: There has been a shift, and how you respond will dictate the impact it will have on your industrial metal-cutting operation.